For hundreds of Denver homeowners involved in the regulatory mess that has ensnared the city’s affordable home ownership program, this month marks the beginning of a period of relative calm.
As of last week, 223 of 301 households flagged earlier this year for failing to complying with rules that manage who can own income-restricted housing and how they use it have agreed to participate in a voluntary resolution program with the city, officials say. Signing up means those homeowners do not have to worry about potential legal action against them until at least Jan. 1.
The deadline to sign up for the program was Thursday. But city officials say the door is still open for the 78 homeowners who haven’t agreed to participate yet.
“At this point, we are going to accept enrollments on a day-to-day basis,” Eric Hiraga, executive director of the Denver Office of Economic Development, said. “Right now we really want to focus our resources and our staff of seven on the compliance team on enrolling more households and working with those households towards a resolution.”
The strong enrollment is a big win from the city’s perspective, but some of those who have signed up remain wary of the fixes the city might pursue.
A majority of the violation cases — 194 of them — involve homes that were sold to new owners that the city did not confirm were income-qualified at the time of purchase.
Many of these owners say they were never informed that their income level put them in violation of the affordable housing program rules. They paid market rates for houses that should have been sold at reduced prices.
Robert McGough, a Denver attorney working with seven homeowners in that situation, said he’s concerned the only remedy the city has publicly suggested is that nonqualifying owners sell to qualifying homebuyers. The catch is the resale price, set by the affordable housing program, would be less than what McGough’s clients paid, potentially costing them thousands of dollars.
“I don’t anticipate the city is going to make these folks whole,” he said.
Despite his concerns, McGough advised his clients to sign up for the resolution program. In letters he sent to the city on behalf of his clients, McGough emphasized they reserve the right to sue the city. He said there are seven or eight legal issues that could make the city liable for damages, including negligent oversight of the program.
“My clients aren’t made of money. This is going to be costly litigation,” McGough said. He said he hopes the 7-month enforcement grace period will “open up the possibility for creative thinking and maybe more palatable solutions on a case-by-case basis.”
The city didn’t wait for its deadline to work on compliance cases. So far, issues with 40 properties have beensolved, officials say. In 34 instances, the owners proved they were income-qualified when they bought their home, qualify now or completed paperwork verifying they understand the program rules. In one case, a homeowner sold the property to another qualified buyer.
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Hiraga knows not every situation will have an easy fix and said the city is considering policy changes that could lead to amicable solutions. The City Council would have to approve any policy changes.
“We realize that is an unfortunate circumstance for some,” he said. “Our intention is not to force people out of their homes. Our intention is to ensure these proprieties serve their true purpose, which is affordable housing.”
Homeowner Neil Patrick O’Toole remains uneasy about his future. The public school teacher bought his home in Green Valley Ranch in 2016 and paid $8,000 over the maximum resale price that should have been placed on it. A McGough client, O’Toole said he is glad he still has the option to pursue legal action. He hopes to stay in his house.
“I don’t want to move. I have started making this my home,” he said. “What I am hoping is to be released from this program so that I can live in my home and take care of it.”
